Docket: T-2438-14
Citation:
2015 FC 1203
Vancouver, British Columbia, October 23, 2015
PRESENT: The
Honourable Mr. Justice Zinn
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BETWEEN:
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ABSOLUTE
SOFTWARE CORPORATION
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Applicant
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and
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VALT.X TECHNOLOGIES INC.
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Respondent
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JUDGMENT AND REASONS
[1]
The Applicant was incorporated in 1993 under the
laws of British Columbia and has operated under the trade-name ABSOLUTE
SOFTWARE since then. It used that name as a common law mark in Canada in
association with computer software and services.
[2]
On July 28 2003, the Applicant registered the
trade-mark ABSOLUTE for use in association with software and services. It has
since registered four other marks containing the word absolute: ABSOLUTE SECURE
DRIVE (September 26, 2011); ABSOLUTE DATA PROTECT (August 15, 2013); ABSOLUTE
MANAGE (March 9, 2011); and ABSOLUTE MANAGE MDM (April 2, 2012).
[3]
On February 28, 2001, the Respondent was
incorporated under the laws of Ontario. It is in start-up mode and produces
software that protects computers against viruses and malware. In November
2012, the Respondent began using the term ABSOLUTE SECURITY in association with
its software.
[4]
With respect to the Applicant’s five registered
trade-marks [the Absolute Marks], the Applicant seeks:
- a declaration that it is the owner of the Absolute
Marks;
- a declaration that the Respondent has infringed the
Absolute Marks;
- damages or an accounting of profits for trade-mark
infringement, depreciation of goodwill, and passing off contrary to
sections 7(b), 7(c), 19, 20, and 22 of the Trade-marks Act, RSC
1985, c T-13;
- in the alternative, an order pursuant to Rule 153
of the Federal Courts Act, referring the determination of the
damages suffered by the Applicant, or the profits wrongfully earned by the
Respondent, to a judge or other person designated by the Chief Justice;
- an injunction restraining the Respondent together
with its officers, directors, servants, agents from infringing the
Absolute Marks, and in particular, from using the mark ABSOLUTE or any
variation of it;
- delivery up, or destruction on oath of all wares,
packages, labels, and advertising material marked ABSOLUTE together with
any dies used in connection therewith.
[5]
Both parties filed fulsome submissions prepared
by experienced trade-mark counsel. By Order dated May 21, 2015, counsel for
the Respondent was removed from the record, and the Respondent was given 30
days to either file and serve a Notice of Appointment of Solicitor or bring a
motion for relief pursuant to Rule 120 of the Federal Courts Rules. The
Respondent did neither.
[6]
When this matter came on for hearing in
Vancouver on October 15, 2015, Dennis Meharchand, Chief Executive Officer of
the Respondent, requested an adjournment so that the Respondent could obtain
counsel. He explained that the Respondent did not have the financial resources
to do so earlier but it now has and will retain counsel within a week.
Alternatively, he asked that he be permitted to represent the Respondent. Both
requests were rejected by the Court.
[7]
In the course of submissions, it was disclosed
that the Respondent retained counsel and commenced an action on September 28,
2015, to expunge the Applicant’s trade-marks. The Respondent made a choice to
use its financial resources to retain counsel to commence the expungement
action, rather than use the funds to retain counsel to appear on this
application. Considering that fact, and others including the passage of five
months since the Court’s Order, the failure of the Respondent to make a request
for an adjournment until the day of the hearing, the attendance in Vancouver of
counsel for the Applicant who travelled from Toronto, and the previous filing
of detailed submissions from former counsel for the Respondent, the Court
rejected both requests and heard oral submissions only from counsel for the
Applicant.
[8]
The Applicant submits that the Respondent uses
ABSOLUTE SECURITY as a trade-mark and that this mark would cause confusion with
its own Absolute Marks. The Applicant admits that it has no evidence of any
actual confusion. The lack of evidence is not surprising given that the
Respondent is in start-up and development mode and has sold less than $2000 in
product thus far.
[9]
The Applicant submits that likely confusion is
established when one examines the five factors listed in subsection 6(5) of the
Trade-marks Act: inherent distinctiveness and extent to which the marks
have become known, the length of time the marks have been in use, the nature of
the wares, services or business, the nature of the trade, and the degree of
resemblance.
[10]
The Applicant’s submissions focus on the
potential for confusion between ABSOLUTE SECURITY and the Applicant’s
registered mark ABSOLUTE, as well as its common law mark ABSOLUTE SOFTWARE.
The Applicant says that these are the most likely candidates for confusion.
[11]
With respect to inherent distinctiveness, the
Applicant submits that the word “absolute” is
inherently distinctive when used in association with security software because
it is not descriptive of that software. It says that the distinctiveness of
the Absolute Marks is further bolstered by the Applicant’s sales of
ABSOLUTE-branded software in Canada, as well as by its website
www.absolute.com, which promotes its products in Canada. In contrast, the
Applicant submits that the Respondent’s mark has little distinctiveness. It
notes that the Respondent’s world-wide revenue from sales of ABSOLUTE
SECURITY-branded software is less than $2000.
[12]
With respect to length of use, the Applicant
submits that it has used the trade-mark and trade-name ABSOLUTE SOFTWARE for more
than 20 years and that its registered trade-mark ABSOLUTE has been in use for
more than a decade. In contrast, the Respondent only began to use the ABSOLUTE
SECURITY mark in November, 2012.
[13]
With respect to the nature of the goods and
services, the Applicant submits that both it and the Respondent use their marks
in association with software that is designed to protect endpoint devices from
security risks, such as viruses and malware.
[14]
With respect to the nature of the trade, the
Applicant submits that its and the Respondent’s products are likely to be sold
through overlapping channels of trade. The Applicant contracts with
manufactures of PCs, tablets, and smartphones to embed its software in those
products. The Respondent is currently seeking to secure contracts with the
same manufactures of the same type. The Applicant also sells products directly
to consumers through retailers like Amazon, Office Depot, and Staples. The
Respondent is likewise seeking to sell its products through retailers like Amazon,
Office Depot, and Staples. Both the Applicant and Respondent also sell their
products through their websites, and both target similar sectors of consumers,
like government contractors and resellers.
[15]
With respect to the degree of resemblance, the
Applicant submits that ABSOLUTE SECURITY closely resembles the Applicant’s
registered mark ABSOLUTE, as well as its common law mark ABSOLUTE SOFTWARE. It
argues that the distinguishing feature in all of these marks is the word “absolute.” The Applicant says that the Respondent
has entirely appropriated this distinguishing feature of its marks.
[16]
The Respondent submits that the Applicant’s
analysis of confusion is based on a false premise, namely, that the Respondent
uses the trade-mark ABSOLUTE SECURITY. The Respondent submits that it does not
use this trade-mark, but rather the mark VALT.X or, in the alternative, VALT.X
ABSOLUTE SECURITY FOR WINDOWS SOFTWARE. The Respondent observes that VALT.X
ABSOLUTE SECURITY FOR WINDOWS SOFTWARE appears frequently on the Respondent’s
website and that, in the rare instances where ABSOLUTE SECURITY FOR WINDOWS is
used without the prefix VALT.X, the VALT.X logo is nonetheless displayed on the
same page. Finally, the Respondent submits that the Applicant’s purported examples
of the Respondent’s stand-alone use of the trade-mark ABSOLUTE SECURITY are either
not examples of stand-alone use or are cherry-picked from an obscure slideshow
posted on the Respondent’s website.
[17]
With respect to inherent distinctiveness, the
Respondent submits that the word “absolute” is a
common English word of a descriptive or suggestive character and thus has
little inherent distinctiveness. It submits that the Applicant’s evidence of
its use and promotion of the Absolute Marks in Canada is problematic. First,
it says that most of the products that the Applicant has sold subscriptions for
in Canada are largely associated with the trade-marks COMPUTRACE and LOJACK FOR
LAPTOPS, rather than the Absolute Marks. Second, it says that the Applicant’s
list of Canadian subscriptions conflates subscriptions purchased by individuals
with those purchased by organizations. It is therefore possible that the
Applicant has sold a large number of subscriptions to a small number of
institutional clients. Third, it notes that the Applicant has provided no
evidence of its promotion and marketing efforts in Canada in particular.
Fourth, it submits that the Applicant’s list of retailers that sell its
products in Canada is actually a list of retailers who are entitled to
sell its products in Canada; it is not clear that these retailers actually
sell its products.
[18]
With respect to length of use, the Respondent
submits that the only evidence provided by the Applicant of its use of the
trade-mark ABSOLUTE prior to 2012 is its 2003 registration of that mark. The
Respondent submits that registration only provides evidence of de minimis use.
[19]
With respect to the nature of the goods and
services and the nature of the trade, the Respondent submits that these two
factors should be assessed by comparing the goods, services, and trade
described in the Applicant’s trade-mark registrations with those of Valt.X.
The statements in the registrations should be read with a view to determining
the probable type of trade that the Applicant intended to engage in, rather
than all possible trades that could be encompassed by the wording. Evidence of
actual trade may be useful in this regard.
[20]
In this case the Respondent submits that,
although there is potential overlap between the type of trade described in the
Applicant’s registrations and that engaged in by Valt.X, the type of trade that
both parties actually engage in differs. While the Applicant’s trade focusses
on “software for the monitoring, tracking and recovery
of computer devices and software for management of computer-security issues,”
the Respondent’s trade focusses on “software that
directly protects against viruses and other malware.” The Respondent
also submits that most of the Applicant’s business derives from large
institutional clients, who are unlikely to be confused when investing
significant resources in the purchase of important software and related
services.
[21]
With respect to the degree of resemblance, the
Respondent submits that the most distinctive part of its trade-mark VALT.X ABSOLUTE
SECURITY FOR WINDOWS SOFTWARE is the made up word “Valt.X.”
It is the first word in the mark and it is the only one that is not
descriptive. Furthermore, the Respondent says that its mark clearly conveys
the message that Valt.X is the entity that is offering the software.
[22]
In addition to its general submissions on
confusion, the Respondent made submissions about the specific legislative
provisions that the Applicant claims are engaged in this case.
[23]
I agree with the Respondent that the Applicant
is over-reaching in suggesting a breach of section 19 of the Trade-marks Act.
This section only applies to situations in which the infringer uses a mark
identical to a registered trade-mark in association with the goods or services
for which that trade-mark is registered. Even the Applicant’s description of
the Respondent’s mark as ABSOLUTE SECURITY does not engage section 19 because
that mark is not identical to any of the Applicant’s registered marks.
[24]
I also agree with the Respondent that paragraph
7(c) of the Trade-marks Act is not engaged on the facts here. In order
to establish a violation of this provision, the Applicant must show that the
Respondent has passed off its goods or services as and for those of the
Applicant in response to a customer’s request for the Applicant’s goods or
services. There is no evidence that the Respondent has done so.
[25]
What remains to be considered is whether the
Respondent has breached any or all of paragraph 7(b), and sections 20 and 22 of
the Trade-marks Act. In order to undertake that analysis, one must
first determine what mark the Respondent used.
[26]
As noted earlier, the Respondent claims that it
has used the trade-mark VALT.X or, in the alternative, the trade-mark VALT.X
ABSOLUTE SECURITY FOR WINDOWS SOFTWARE. If the Respondent used the mark
VALT.X, then the Applicant’s claim must fail because VALT.X bears no
resemblance to the Absolute Marks. Similarly, if this Court finds that the
Respondent used the mark VALT.X ABSOLUTE SECURITY FOR WINDOWS SOFTWARE, then
the Applicant’s claim may well fail because of the many points of difference
between it and the Absolute Marks.
[27]
Based on my review of the evidence, I agree with
the Applicant that, in addition to using the trade-mark VALT.X, the Respondent
uses the trade-mark ABSOLUTE SECURITY with respect to its software.
[28]
Illustrations of the Respondent’s use of the
trade-mark ABSOLUTE SECURITY can be found in the Applicant’s record. Exhibit J
to the affidavit of Steven Midgley is a print-out of the Respondent’s website.
Page 153 of the Applicant’s Record appears to depict the various product lines
sold by Valt.X, under the heading “Collections.”
The product lines are labelled “‘The S Chip’
Desktop/Server Secure Cards,” “Absolute Security
for Windows Software,” and “Cyber Secure Notebooks.”
Directly above the words “Absolute Security for Windows
Software” is an image of a box containing the software in question. At
the top of the box is the Valt.X logo against a white background. Below that
logo, on a red background and in a different font and capitalized, are the
words “ABSOLUTE SECURITY.” The words “for WINDOWS” appear just below and in a smaller font.
[29]
I agree with the Applicant that using these
words in the manner noted and presenting them to the customer in that fashion
would lead the customer to conclude that the software is made by Valt.X, that
ABSOLUTE SECURITY is one of its product lines, and that the products in that
line are compatible with the Windows operating system. This is the view a
consumer would reach because the words “ABSOLUTE
SECURITY” are capitalized; appear in a large and different font on the
box, and against a different background than the word “VALT.X.”
The phrase “for WINDOWS” is clearly descriptive
of the product and would not be mistaken for the name of the product line.
[30]
An earlier part of the print-out, at page 148 of
the Applicant’s record, appears to depict the web page that would appear if one
were to click on the ABSOLUTE SECURITY product line on the web page entitled “Collections.” This page is entitled “Valt.X Absolute Security for Windows Software” and
contains entries for various software products entitled “Standard Edition,” “Professional
Edition,” “Special Edition,” and “Premium Edition – Password.” Once again, the
inference a customer would draw from this web page is that Valt.X offers a line
of software products, for use on the Windows operating system, that are branded
with the trade-mark ABSOLUTE SECURITY.
[31]
The Respondent’s suggestion that it uses the
trade-mark VALT.X ABSOLUTE SECURITY FOR WINDOWS SOFTWARE ignores the
differences in how the elements “Valt.X,” “Absolute Security,” and “for
Windows Software” are portrayed on its own website and product
packaging. It also ignores the different functions that these elements
perform. It conflates the trade-name and trade-mark for the company as a whole
(“Valt.X”) with a trade-mark for a specific
product line (“Absolute Security”), with a
purely descriptive element (“for Windows Software”).
[32]
For these reasons, I find that the Respondent
has used the trade-mark ABSOLUTE SECURITY. Furthermore, upon considering the
five factors in subsection 6(5) of the Trade-marks Act, I find that use
to be confusing with the Applicant’s registered trade-mark ABSOLUTE and its
common law mark ABSOLUTE SOFTWARE.
[33]
With respect to inherent distinctiveness, I
agree with the Respondent that the word “Absolute”
lacks distinctiveness because it is a common English word of a descriptive or
suggestive character. I also agree that the Applicant’s evidence of its use
and promotion of the Absolute Marks in Canada is weak because it does not
provide a clear picture of the Applicant’s marketing expenditures in Canada in
particular, does not indicate how many customers the Applicant has in Canada,
and does not indicate which of the Applicant’s retail partners actually offer
its products in Canada. Furthermore, the Applicant’s data with respect to the
number of active subscriptions that it had in Canada as of June 30, 2014
includes subscriptions for products that may not be primarily associated with
the Absolute Marks (i.e. COMPUTRACE and LOJACK FOR LAPTOPS products). This
factor favours the Respondent.
[34]
With respect to length of use, I agree with the
Respondent that the Applicant has provided no more than de minimis
evidence of use in Canada prior to 2012. While the Applicant registered its
mark ABSOLUTE in 2003 and claims that it has used its common law mark ABSOLUTE
SOFTWARE since 1993, its web traffic data only provides evidence of use since
2012. This factor favours the Applicant.
[35]
With respect to the nature of the goods and
services, I agree with the Respondent that there are differences in the purpose
and function of the Applicant’s and Respondent’s software. The Respondent’s
software directly protects against viruses and malware by ensuring that every
time a computer is restarted, any viruses or malware that have infected its
system since the last restart are eliminated. In contrast, the Applicant’s
software performs a number of functions, including allowing organizations to
remotely track and secure their devices (ABSOLUTE COMPUTRACE), manage and
maintain their devices (ABSOLUTE MANAGE), provide IT services (ABSOLUTE
SERVICE), and control the encryption systems on their devices’ hard drives
(ABSOLUTE SECURE DRIVE).
[36]
The Applicant also produces software that allows
individuals to locate and secure the information on their laptops (COMPUTRACE
LOJACK FOR LAPTOPS). It is thus fair to say that the Applicant produces
software that serves a wide range of related but distinct functions, some of
which are quite different from the functions performed by the Respondent’s
software. However, the fact remains that both parties produce software that is
designed to provide security against viruses and malware for endpoint devices
like laptops. I agree with the Applicant that the differences between the
Applicant and Respondent’s software would be relevant and noted only by a “computer geek” and that the average hurried consumer
would consider both as being software designed to provide security against threats
including viruses and malware. This factor favours the Applicant.
[37]
The Respondent submits that, when determining
the nature of the trade that is covered by a registered trade-mark, the
statements in the registration should be read with a view to determining the
probable type of trade that the Applicant intended to engage in, having regard
to its actual trade. While I agree with the Respondent that the Applicant’s
actual trade may provide valuable context when interpreting the statements in
its registrations, this Court should be cautious not to restrict the protective
scope of the Applicant’s registered marks based on its actual use. As the
Supreme Court held in Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC
27, [2011] 2 S.C.R. 387, at para 59:
[a]ctual use is not irrelevant, but it
should not be considered to the exclusion of potential uses within the
registration. For example, a subsequent use that is within the scope of a
registration, and is the same or very similar to an existing mark will show how
that registered mark may be used in a way that is confusing with an existing
mark.
[38]
Therefore, while I agree with the Respondent
that the majority of the Applicant’s sales are to sophisticated institutional
clients who are unlikely to be confused, I also agree with the Applicant that
the protection conferred by its registered mark ABSOLUTE extends beyond such
sales to encompass sales to individual customers, and that it does in fact sell
to some individuals. I also agree with the Applicant that many of the
retailers and end-users that are targeted by the Respondent are the same as
those who currently buy from the Applicant. Therefore this factor favours the
Applicant.
[39]
With respect to resemblance, I agree with the
Applicant that ABSOLUTE SECURITY resembles ABSOLUTE and ABSOLUTE SOFTWARE. I
also agree that the distinctive feature of these marks is the word “absolute” because the other words (“software” and “security”) are
highly descriptive. In particular, the Respondent’s use of the word “security” would do little to prevent any confusion that
would otherwise be created by its use of the word “absolute,”
because “security” is descriptive of both the
Applicant’s and Respondent’s products. This factor strongly favours the
Applicant.
[40]
The Applicant has established confusion between
its trade-mark ABSOLUTE and the Respondent’s use of the trade-mark ABSOLUTE
SECURITY and has therefore proved its case for infringement under section 20 of
the Trade-marks Act.
[41]
Similarly, on the balance of probabilities, the
Applicant has proved its case for a breach of paragraph 7(b) of the Trade-marks
Act. The Respondent argues that 7(b) does not apply because “there is no evidence that Valt.X intentionally used the word
‘absolute’ to deceive the public or was negligent in its use of the word
‘absolute’.” It also submits that its conduct has not caused the
Applicant any actual or potential damage.
[42]
With respect to the deception issue, I agree
that there is no evidence that the Respondent used the trade-mark ABSOLUTE
SECURITY in a deliberate attempt to deceive. However, given the clear
resemblance between ABSOLUTE SECURITY and the Absolute Marks, and the
overlapping markets in which the Applicant and Respondent operate, the
Respondent was negligent in its use of that mark. This is particularly so
given that the Respondent is just at the beginning of its existence as a
business and it would appear that discontinuing the use of that mark would be
easy and inexpensive.
[43]
With respect to the damages issue, the Federal
Court of Appeal in Remo Imports Ltd v Jaguar Cars
Ltd, 2007 FCA 258, [2008] 2 FCR 132 clarified that
the requirement to show potential damages requires proof of the likelihood of
damages. The Applicant has established the likelihood damages in this case, given
the Respondent’s use of a confusing mark in a very similar market as the
Applicant.
[44]
Liability under section 22 does not depend on a
finding of confusion but on finding that the Respondent’s use of the
Applicant’s mark is likely to depreciate the value of the goodwill attaching
thereto. The Respondent submits that there is no depreciation in this case
because a customer would not associate the Respondent’s use of the word “absolute” with the Absolute Marks, and because the
Applicant has not adduced evidence of depreciation of goodwill.
[45]
I agree that the Applicant has not provided
evidence of depreciation. Just because the Respondent’s mark is confusing with
the Absolute Marks does not mean that this confusion will lead to
depreciation. As the Supreme Court of Canada noted in Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824 at para 43 “a mental association of the two marks does
not, under s. 22, necessarily give rise to a likelihood of depreciation.”
[46]
The Applicant submits, in place of evidence,
that:
as Absolute has no control over the
character and quality of the goods and services offered by the Respondent, if
the Respondent’s products are of an inferior quality than Absolute’s products
and fail to meet customers’ expectations, it will depreciate Absolute’s
goodwill in the ABSOLUTE registered marks.
I agree with the
Respondent that this speculative concern cannot support an inference of likely
depreciation.
[47]
For these reasons, the application will be
allowed. A declaration of ownership and infringement
will issue but will be limited to the Applicant’s marks ABSOLUTE and ABSOLUTE
SOFTWARE, since these are the only marks about which the Applicant made
substantive submissions. An injunction against future infringement of the marks
ABSOLUTE and ABSOLUTE SOFTWARE will also issue and the Respondent will be
ordered to deliver up and destroy all of its goods,
packaging, labels, and advertising that bear the infringing mark ABSOLUTE
SECURITY. Finally, given the lack of evidence of confusion or depreciation,
and evidence that the Respondent’s sales of ABSOLUTE
SECURITY-branded products only total $1,939.53, damages
of $2,000.00 will be awarded.
[48]
The Respondent submits that any injunction
should permit Valt.X to continue using the trade-mark VALT.X ABSOLUTE SECURITY
FOR WINDOWS SOFTWARE. I will make no such order as I have not found that the
Respondent uses this mark.
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